John Kartch

Today ATR’s Center for Worker Freedom announced a new radio campaign in Chattanooga. The transcript of the 30-second spot is as follows:

"The UAW wants you to believe that VW employees are deciding whether or not to have a German-style works council.

Wrong!

The UAW is the only thing on the ballot. The same union that bankrupted GM and Detroit. The truth is, workers don't need the UAW to form a works council, and VW doesn't need a works council to make cars.

Chattanooga isn't Germany, or Detroit.

At least, not yet.

Paid for by Americans for Tax Reform. Workerfreedom.org"

The full spot can be heard on YouTube, set to a slideshow of Center for Worker Freedom billboards, here:

The ad will run in morning and afternoon drive times on some of Chattanooga's most popular radio stations through February 14, including:

As reported earlier this week, HHS Secretary Kathleen Sebelius has been engaged in partnership discussions with the NFL and NBA to promote Obamacare.

Before the leagues agree to shill for the despised health care law, they would be wise to take a close look at the impact of its tax provisions. The Obamacare law contains twenty new or higher taxes, including one that will raise income taxes on 10 million middle class families facing high out-of-pocket medical expenses. The average family subject to this new tax makes just over $53,000 and will face an income tax increase of between $200 - $400 per year.

Background: Americans have long been allowed to deduct out of pocket medical expenses as an itemized deduction on their taxes. They cannot have already benefited from other tax provisions for health care like tax-free employer-provided care or tax-free accounts like flexible spending accounts (FSAs) or health savings accounts (HSAs). A full list of qualified expenses can be found in IRS Publication 502.

After totaling all unreimbursed, out-of-pocket medical expenses, the taxpayer must then subtract from this figure an amount equal to 7.5 percent of the taxpayer's adjusted gross income (AGI). This subtraction amount is known commonly as a "haircut."

According to the IRS, 10 million families took advantage of this tax deduction in 2009, the latest year of available data. They deducted $80 billion in medical expenses after applying the “haircut.” The Office of Management and Budget reports that this tax deduction saves these taxpayers upwards of $10 billion annually.

Obamacare's tax hike: The Obamacare law made one change to this tax provision: it raised the "haircut" from 7.5 percent of AGI to 10 percent of AGI. Since virtually all taxpayers claiming this income tax deduction make less than $200,000 per year, the income tax hike falls almost exclusively on the middle class:

-Virtually every family taking this deduction made less than $200,000 in 2009. Over 90 percent earned less than $100,000.

-The average taxpayer claiming this deduction earns just over $53,000 annually.

-ATR estimates that the average income tax increase for the average family claiming this tax benefit will be $200 - $400 per year.

-This income tax increase is focused on families with the largest medical bills that weren't covered by insurance. So the target population is low-and middle-income families with debilitating medical costs. That's a good definition of the opposite of “affordable” or “caring.”

According to the Joint Tax Committee, this tax increase is scheduled to raise between $2 billion and $3 billion annually. That may be a drop in the bucket in Washington DC, but try telling that to the $53,000 family with high medical bills that just saw a tax increase.

As reported Monday, HHS Secretary Kathleen Sebelius said the NFL “has been very actively and enthusiastically engaged [in Obamacare promotion talks with HHS] because they see health promotion as one of the things that's good for them and good for the country."

This potential partnership between the Obama administration and pro sports leagues - such as the NFL, NBA, MLB, and NHL – to shill for the partisan and controversial Obamacare law should be rejected by the commissioners and players of each league. The Obamacare law contains twenty new or higher taxes, including one that will particularly harm families with special needs children.

Here’s how it works: The 30 - 35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family's basic medical needs face a new Obamacare cap of $2,500. This will squeeze $13 billion of tax money from Americans over the next ten years. (Before Obamacare, the accounts were unlimited under federal law, though employers were allowed to set a cap.) Now, a parent looking to sock away extra money to pay for their family’s medical needs will find themselves quickly hitting this new cap, meaning they would have to pony up some or all of the cost with after-tax dollars.

There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. Nationwide there are several million families with special needs children and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. This Obamacare tax provision will limit the options available to these families.

Besides, a fan wants to enjoy watching his favorite team play, not be reminded about how his taxes have gone up.

Rather than help advocate for a law that hikes taxes on families with special needs children, the NFL and NBA should be standing up for its fans.

Today, HHS Secretary Kathleen Sebelius confirmed that the Obama administration is involved in talks with the NFL and other major sports leagues about enrollment partnerships to advocate for the controversial healthcare law known as Obamacare. As Sebelius said:

“It’s clear that we’re having discussions, active discussions, right now with a variety of sports affiliates — both in terms of what will end up being paid advertising but hopefully some partnership efforts.”

The HHS Secretary also said:

“The NFL for instance, in the conversations that I’ve had, has been very actively and enthusiastically engaged because they see health promotion as one of the things that’s good for them and good for the country.”

Sebelius’ comments confirm a recent Politico report about the NBA and its potential partnership to promote Obamacare. While it is unclear whether prominent players – such as LeBron James, Carmelo Anthony, and Kobe Bryant – would be featured in ad campaigns or whether the NBA logo would be attached to marketing tools, the league and its players should refuse the offer.

For starters, Obamacare is the most partisan and controversial law in the United States. By partnering with the current administration, the NBA would no longer be a sports league devoid of political affiliation or allegiance. Secondly, players featured in potential Obamacare ad campaigns will be advocating for higher taxes on the American public. President Obama has made it clear that he believes Americans should pay more, so why would NBA players advocate a tax hike on themselves? Of the twenty new or higher taxes contained in Obamacare, at least seven hit the middle class (here are the five worst). Athletes are already taxed at the top marginal rate at the federal and state level prior to paying a “jock tax” on away games. Shouldn’t they want their rates lowered rather than increased?

The chart below shows the effect of Obamacare’s Medicare payroll tax rate hike on some of the NBA’s most popular players. The Medicare payroll tax on these players has risen from 2.9 percent to 3.8 percent of their salary (in excess of $200,000 single/$250,000 married) under Obamacare.

Player

Salary

Obamacare Medicare Tax

Kobe Bryant

$27,849,149

$250,642

LeBron James

$17,545,000

$157,905

Kevin Durant

$16,669,629

$150,027

Carmelo Anthony

$19,444,503

$175,001

Derrick Rose

$16,402,500

$147,623

Kevin Garnett

$11,566,265

$104,096

Joakim Noah

$11,300,000

$101,700

Rajon Rondo

$11,000,000

$99,000

Blake Griffin

$7,226,892

$65,042

Kyrie Irving

$5,375,760

$48,382

Tim Duncan

$9,638,554

$86,747

Josh Smith

$13,200,000

$118,800

Deron Williams

$17,177,795

$154,600

Chris Paul

$17,779,458

$160,015

Dwayne Wade

$17,182,000

$154,638

Paul Pierce

$16,790,345

$151,113

Tony Parker

$12,500,000

$112,500

Jeremy Lin

$8,374,646

$75,372

Brandon Jennings

$3,179,493

$28,615

Dirk Nowitzki

$20,907,128

$188,164

*The formula used to calculate Obamacare’s Medicare Tax is the player’s Salary x the 0.9 percent Medicare payroll tax rate hike found within Obamacare. Salaries were found at http://espn.go.com/nba/salaries

The last thing American families want to see while enjoying their favorite sports is a reminder of how much the Obama administration is trying to tax them. Visit atr.org to see all twenty new or higher taxes in Obamacare.

Top Comments

The House is voting today on H.R. 1549, the “Helping Sick Americans Now Act.” This legislation enjoys broad support across the conservative movement, including from those organizations most active in Obamacare repeal efforts.

Top Comments

On Wednesday, March 5, Treasury Inspector General for Tax Administration J. Russell George tesified before the House Appropriations Committee. As part of his exchange with lawmakers, Mr. George was asked about the tax implications of Obamacare.

“It is unprecedented in recent history, the amount of responsibility the IRS is being given in an area that most people don’t think of as an IRS function,” George said. Americans, he added, will have more questions about their taxes because of health care penalties or credits, flooding already busy call-in and walk-in tax help centers. “This is going to lead to problems, sir.”

And these resource issues are bound to spill over into tax fraud enforcement, where the IRS will have to do a cost-benefit analysis when determining which tax fraudsters to chase.

“They have to determine what enforcement mechanisms they’ll employ … how they go about determining who to audit and who not to,” George said.

The IRS is not capable of doing all this, as the quotation above confirms.

Here is the list:

Prohibits group health plans from discriminating in favor of highly compensated individuals.

Establishes a temporary reinsurance program to provide reimbursement for a portion of the cost of providing health insurance coverage to early retirees.

Imposes a penalty on health plans identified in an annual Department of Health and Human Services (HHS) penalty fee report, which is to be collected by the Financial Management Service after notice by the Department of the Treasury (Treasury).

Requires state exchanges to send to Treasury a list of the individuals exempt from having minimum essential coverage, those eligible for the premium assistance tax credit, and those who notified the exchange of change in employer or who ceased coverage of a qualified health plan.

Provides tax exemption for entities providing reinsurance for individual policies during first 3 years of state exchanges.

Provides premium assistance refundable tax credits for applicable taxpayers who purchase insurance through a state exchange, paid directly to the insurance plans monthly or to individuals who pay out-of-pocket at the end of the taxable year.

Authorizes IRS to disclose certain taxpayer information to HHS for purposes of determining eligibility for premium tax credit, cost-sharing subsidy, or state programs including Medicaid, including (1) taxpayer identity; (2) the filing status of such taxpayer; (3) the modified adjusted gross income of taxpayer, spouse, or dependents; and (4) tax year of information.

Provides nonrefundable tax credits for qualified small employers (no more than 25 full-time equivalents (FTE) with annual wages averaging no more than $50,000) for contributions made on behalf of its employees for premiums for qualified health plans.

Requires all U.S. citizens and legal residents and their dependents to maintain minimum essential insurance coverage unless exempted starting in 2014 and imposes a fine on those failing to maintain such coverage.

Requires every person who provides minimum essential coverage to file an information return with the insured individuals and with IRS.

Imposes a penalty on large employers (50+ FTEs) who (1) do not offer coverage for all of their full-time employees, offer unaffordable minimum essential coverage, or offer plans with high out-of-pocket costs and (2) have at least one full-time employee certified as having purchased health insurance through a state exchange and was eligible for a tax credit or subsidy.

Requires information reporting of health insurance coverage information by large employers (subject to IRC 4980H) and certain other employers.

Offers tax exclusion for reimbursement of premiums for small-group exchange participating health plans offered by small employers to all full-time employees as part of a cafeteria plan.

Subjects new group health plans to certain Public Health Service Act requirements and imposes the excise tax on plans that fail to meet those requirements. (Conforming amendment)

Authorizes IRS to disclose certain taxpayer information to the Social Security Administration (SSA) regarding reduction in the subsidy for Medicare Part D for high-income beneficiaries. (Conforming amendment)

Requires the independent institute partnering with the National Academy of Sciences (NAS) to implement a key national indicator system to be a nonprofit entity under section 501(c)(3).

. Imposes a fee through 2019 on specified health insurance policies and applicable self-insured health plans to fund the Patient-Centered Outcomes Research Trust Fund to be used for comparative effectiveness research.

Imposes a 40 percent excise tax on high cost employer-sponsored health insurance coverage on the aggregate value of certain benefits that exceeds the threshold amount.

Requires employers to disclose the value of the employee’s health insurance coverage sponsored by the employer on the annual Form W-2.

Increases tax on distributions from HSAs and Archer MSAs not used for medical expenses.

Limits health FSAs under cafeteria plans to a maximum of $2,500 adjusted for inflation.

Imposes additional reporting requirements for charitable hospitals to qualify as tax-exempt under IRC 501(c)(3) and requires hospitals to conduct a community health needs assessment at least once every 3 years and to adopt a financial assistance policy and policy relating to emergency medical care.

Imposes a fee on each covered entity engaged in the business of manufacturing or importing branded prescription drugs.

Imposes an annual fee on any entity that provides health insurance for any U.S. health risk with net premiums written during the calendar year that exceed $25 million.

Allows the deduction for retiree prescription drug expenses only after the deduction amount is reduced by the amount of the excludable subsidy payments received.

Increases the threshold for the itemized deduction for unreimbursed medical expenses from 7.5 percent of Adjusted Gross Income (AGI) to 10 percent of AGA (unless taxpayer turns 65 during 2013-2016 and then threshold remains at 7.5 percent).

Denies the business expenses deductions for wage payments made to individuals for services performed for certain health insurance providers if the payment exceeds $500,000.

Imposes an additional Hospital Insurance (Medicare) Tax of 0.9 percent on wages over $200,000 for individuals and over $250,000 for couples filing jointly.

Limits eligibility for deductions under section 833 (treatment of Blue Cross and Blue Shield) unless the organizations meet a medical loss ratio standard of at least 85 percent for the taxable year.

Allows an exclusion from gross income for the value of specified Indian tribe health care benefits.

Requires employers to provide free choice vouchers to certain employees who contribute over 8 percent but less than 9.8 percent of their household income to the employer’s insurance plan to be used by employees to purchase health insurance though the exchange.

Imposes a tax on any indoor tanning service equal to 10 percent of amount paid for service.

Excludes from gross income amounts received by a taxpayer under any state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health care services in underserved or health professional shortage areas.

Increases the maximum adoption tax credit and the maximum exclusion for employer-provided adoption assistance for 2010 and 2011 to $13,170 per eligible child.

Extends the exclusion from gross income for reimbursements for medical expenses under an employer-provided accident or health plan to employees’ children under 27 years.

Imposes an unearned income Medicare contribution tax of 3.8 percent on individuals, estates, and trusts on the lesser of net investment income or the excess of modified adjusted gross income (AGI + foreign earned income) over a threshold of $200,000 (individual) or $250,000 (joint).

Imposes a tax of 2.3 percent on the sale price of any taxable medical device on the manufacturer, producer, or importer

Amends the cellulosic biofuel producer credit (nonrefundable tax credit of about $1.01 for each gallon of qualified fuel production of the producer) to exclude fuels with significant water, sediment, or ash content (such as black liquor).

Clarifies and enhances the applications of the economic substance doctrine and imposes penalties for underpayments attributable to transactions lacking economic substance.

Increases the required payment of corporate estimated tax due in the third quarter of 2014 by 15.75 percent for corporations with more than $1 billion in assets, and reduces the next payment due by the same amount.

As just one example, below are some of the taxes that will impact the purchase of dental braces:

Obamacare Medical Device Tax: As of Jan.1, Obamacare imposes a new tax of 2.3 percent on medical device manufacturers, including those who make dental braces. The tax is imposed on gross sales -- even if the company does not earn a profit in a given year. While the tax will be paid to the IRS by the manufacturer, the tax will be passed along as a higher cost of the product, ultimately to be borne by the parent buying the braces for their child. With the cost of braces being as high as $7,625 this new tax could raise the cost of these braces by $175.

Obamacare Flexible Spending Account Cap: As of Jan. 1, the 30-35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs face a new government cap of $2,500. This will squeeze $13 billion of tax money from Americans over the next ten years. (Before Obamacare, the accounts were unlimited under federal law, though employers were allowed to set a cap.) A parent looking to sock away extra money to pay for braces would find themselves quickly hitting this new cap, meaning they would have to pony up some or all of the cost with after-tax dollars. Needless to say, this tax will especially impact middle class families.

Obamacare “Haircut” to the Medical Itemized Deduction: Faced with higher prices for braces and a reduced ability to pay for them with their FSA, parents might decide to deduct the cost of braces on their tax returns. Unfortunately, Obamacare makes this harder, too.

Before Obamacare, Americans facing high medical and dental expenses were allowed a deduction to the extent that those expenses exceeded 7.5 percent of adjusted gross income (AGI). As of Jan. 1, Obamacare imposes a threshold of 10 percent of AGI. Therefore, Obamacare not only makes it more difficult to claim this deduction, it widens the net of taxable income.

According to the IRS, 10 million families took advantage of this tax deduction in 2009, the latest year of available data. Almost all are middle class. The average taxpayer claiming this deduction earned just over $53,000 annually. ATR estimates that the average income tax increase for the average family claiming this tax benefit will be $200 - $400 per year. To learn more about this tax, click here.

This is just a small example of how a simple, everyday, kitchen table decision has been fundamentally altered by the tax hikes in Obamacare. It does not even take into account the indirect effects of the rest of the tax hikes in the law, which will reduce family income and kill jobs.

The average family subject to this new tax makes just over $53,000 and will face an income tax increase of between $200 - $400 per year.

Background: Americans have long been allowed to deduct out of pocket medical expenses as an itemized deduction on their taxes. They cannot have already benefited from other tax provisions for health care like tax-free employer-provided care or tax-free accounts like flexible spending accounts (FSAs) or health savings accounts (HSAs). A full list of qualified expenses can be found in IRS Publication 502.

After totaling all unreimbursed, out-of-pocket medical expenses, the taxpayer must then subtract from this figure an amount equal to 7.5 percent of the taxpayer's adjusted gross income (AGI). This subtraction amount is known commonly as a "haircut."

According to the IRS, 10 million families took advantage of this tax deduction in 2009, the latest year of available data. They deducted $80 billion in medical expenses after applying the “haircut.” The Office of Management and Budget reports that this tax deduction saves these taxpayers upwards of $10 billion annually.

Obamacare's tax hike: The Obamacare law made one change to this tax provision: it raised the "haircut" from 7.5 percent of AGI to 10 percent of AGI. Since virtually all taxpayers claiming this income tax deduction make less than $200,000 per year, the income tax hike falls almost exclusively on the middle class:

-Virtually every family taking this deduction made less than $200,000 in 2009. Over 90 percent earned less than $100,000.

-The average taxpayer claiming this deduction earns just over $53,000 annually.

-ATR estimates that the average income tax increase for the average family claiming this tax benefit will be $200 - $400 per year.

-This income tax increase is focused on families with the largest medical bills that weren't covered by insurance. So the target population is low- and middle-income families with debilitating medical costs. That's a good definition of the opposite of “affordable” or “caring.”

According to the Joint Tax Committee, this tax increase is scheduled to raise between $2 billion and $3 billion annually. That may be a drop in the bucket in Washington DC, but try telling that to the $53,000 family with high medical bills that just saw a tax increase.

Top Comments

1. Obama: “Four years ago, I told the American people I would cut taxes for middle class families. And I did.”

Reality: Obama has clearly broken his 2008 “firm pledge” not to sign “any form of tax increase” on families making less than $250,000. Of the twenty new or higher taxes in Obamacare, no fewer than seven of the taxes fall directly on middle class families, and many more will raise costs indirectly for these families.

Of recent note, Obama has altered his tax pledge: In a second term, he only promises not to raise income taxes on those making less than $250,000, and only for one year. After the one year has come and gone, all taxes are fair game, and at any income level.

2. Obama: “The fact that is that [Romney] only has to pay 14 percent on his taxes when a lot of you are paying much higher.”

Reality: The President is intentionally mixing apples and oranges, and more than once. What he is accurately describing is Mitt Romney’s average income tax rate—that is, his income tax liability as a percentage of his adjusted gross income. In 2011, he paid $1.9 million in federal income tax on $13.7 million of AGI, for an average income tax rate of 14 percent.

What President Obama would like middle class taxpayers to do is to compare Romney’s average rate with their own marginal rate. The marginal rate is the rate at which a household’s last dollar of taxable income is taxed. For middle class families, their marginal tax rate is 15, 25, or 28 percent, depending on income. These are all higher than Romney’s average rate, but that isn’t a fair comparison. It’s mixing apples (average rate) with oranges (marginal rate).

The President would also like middle class families to add in their total federal tax burden (which includes Social Security and Medicare payroll taxes) and compare this to Romney’s average income tax rate. Again, this is comparing apples (income tax burden) with oranges (total federal tax burden).

The fairest method is to compare middle class average income tax rates with Romney’s average income tax rate. After all, that latter data point is the one the President used, so it’s most fair to compare that number with middle class families. According to CBO, a family in the middle income quintile (those earning at least $34,000) had an average income tax rate of 3.3 percent. Those in the fourth quintile (earning at least $50,000) had an average income tax rate of 6.2 percent. Only when you get to the top quintile (those earning $75,000 and more) do the average rates cross Mitt Romney’s 14 percent line. In no way can the President credibly claim that a typical middle class family has a higher average income tax rate than Romney’s 14 percent average income tax rate.

Even when comparing total federal taxes, it doesn’t hold up. Romney’s income puts him in the top 1 percent of income earners. Their overall average federal tax rate (which includes payroll taxes as well as income taxes) is nearly 30 percent. Compare that to families earning $34,000 per year (14 percent), and $50,000 per year (17 percent).

3. Obama: “[Four years ago] I told you I'd cut taxes for small businesses, and I have.”

Reality: The principal tax cut for small business that President Obama is bragging about is a small employer tax credit to purchase health insurance. The only problem is that this tax credit is so complicated to comply with, very few small employers are actually using it. The IRS and HHS practically have to beg employers to even take a look at it. According to CBO, their estimated score for this tax provision is half of what they originally thought it would be, or $20 billion over the next decade. Meanwhile, even this small amount is dwarfed by the rate hike small employers will face under the President’s plan.

In May, the Government Accountability Office released a report focusing on why so few businesses were using the credit:

Meanwhile, the President’s plan to raise the top two marginal income tax rates will not just affect high-income families. Because small businesses pay taxes using the individual rates, a hike in these rates is a hike in the small business tax rate. According to IRS data, a majority of small business profits face taxation in the top two brackets.

The Obama-Biden plan is a tax increase on one million successful small businesses. The plan will raise taxes on a majority of small business profits and hit those companies which employ a majority of Americans who work for small businesses. Americans for Tax Reform spells out the details here.

4. Obama: “Both Governor Romney and I agree actually that we should lower our corporate tax

rate.”

Reality: Obama claims to be for corporate tax reform, but it isn’t even in his budget. His administration released a plan in the spring, but he hadn’t said a word about it until the first debate.

Even that plan would have been a net corporate income tax hike of hundreds of billions of dollars. With a federal rate of 28 percent, the U.S. would still have a higher corporate tax rate than major trading partners Canada, the United Kingdom, Germany, and Mexico. It would be higher than the OECD (developed nation) average of 25 percent. The federal rate reduction from today’s 35 percent is inadequate.

Furthermore, Obama has already signed into law tax hikes on corporate shareholders. Taxes on corporate owners (i.e. capital gains and dividend taxes) are additional bites at the apple of corporate profits.

The combination of the capital gains and dividends rate hikes in his budget and Obamacare’s 3.8 percent “investor surtax” have the effect of raising the integrated tax on corporate profits. The capital gains and dividends rate hike will hit middle class savings hard by lowering stock prices, impacting everyone’s 401(k) and IRA.

5. Obama: “What I've also said is for above $250,000, we can go back to the tax rates we had when Bill Clinton was president.”

Reality: Under the Obama-Biden plan, several tax rates for these households would be higher than during the Bill Clinton years. In particular, tax rates on investment income would be much higher than when Clinton left office:

1. A 156 percent increase in the federal excise tax on tobacco: On February 4, 2009, just sixteen days into his Administration, Obama signed into law a 156 percent increase in the federal excise tax on tobacco, a hike of 61 cents per pack. The median income of smokers is just over $36,000 per year.

2. Obamacare Individual Mandate Excise Tax (takes effect in Jan 2014): Starting in 2014, anyone not buying “qualifying” health insurance – as defined by Obama-appointed HHS bureaucrats -- must pay an income surtax according to the higher of the following:

1 Adult

2 Adults

3+ Adults

2014

1% AGI/$95

1% AGI/$190

1% AGI/$285

2015

2% AGI/$325

2% AGI/$650

2% AGI/$975

2016 +

2.5% AGI/$695

2.5% AGI/$1390

2.5% AGI/$2085

The Congressional Budget Office recently estimated that six million American families will be liable for the tax, and as Americans for Tax Reform has pointed out, 100 percent of Americans filing a tax return (140 million filers) will be forced to submit paperwork to the IRS showing they had “qualifying” health insurance for every month of the tax year. Bill: PPACA; Page: 317-337)

3. Obamacare Employer Mandate Tax (takes effect Jan. 2014): If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2000 for all full-time employees. Applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer). Bill: PPACA; Page: 345-346

4. Obamacare Surtax on Investment Income (Tax hike of $123 billion/takes effect Jan. 2013): Creation of a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single). This would result in the following top tax rates on investment income: Bill: Reconciliation Act; Page: 87-93

Capital Gains

Dividends

Other*

2011-2012

15%

15%

35%

2013+ (current law)

23.8%

43.4%

43.4%

2013+ (Obama budget)

23.8%

23.8%

43.4%

*Other unearned income includes (for surtax purposes) gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations. It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income. It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans. The 3.8% surtax does not apply to non-resident aliens.

9. Obamacare Flexible Spending Account Cap – aka “Special Needs Kids Tax” (Tax hike of $13 bil/takes effect Jan. 2013): Imposes cap on FSAs of $2500 (currently unlimited). Indexed to inflation after 2013. There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. Bill: PPACA; Page: 2,388-2,389

10. Obamacare Tax on Medical Device Manufacturers (Tax hike of $20 bil/takes effect Jan. 2013): Medical device manufacturers 409,000 people in 12,000 plants across the country. This law imposes a new 2.3 percent excise tax on total sales, even if the respective company does not earn a profit. Exempts items retailing for <$100. Bill: PPACA; Page: 1,980-1,986

11. Obamacare "Haircut" for Medical Itemized Deduction from 7.5% to 10% of AGI (Tax hike of $15.2 bil/takes effect Jan. 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). The new provision imposes a threshold of 10 percent of AGI. Waived for 65+ taxpayers in 2013-2016 only. Bill: PPACA; Page: 1,994-1,995

12. Obamacare Tax on Indoor Tanning Services (Tax hike of $2.7 billion/took effect July 2010): New 10 percent excise tax on Americans using indoor tanning salons. Making matters worse: According to a Treasury Inspector General for Tax Administration report, the Obama IRS didn’t bother to issue compliance guidelines until three quarterly filing deadlines had passed: “By the time [IRS] notices were issued, tanning excise tax returns had been due for three quarters." Bill: PPACA; Page: 2,397-2,399

14. Obamacare Blue Cross/Blue Shield Tax Hike (Tax hike of $0.4 bil/took effect Jan. 1 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services. Bill: PPACA; Page: 2,004